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Department of Economics, Stellenbosch University; Department of Economic and Social History, Utrecht University

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Department of Economics, Stellenbosch University; Department of Economic and Social History, Utrecht University Settler skills and colonial development: The case of the French Huguenots in Dutch South Africa* JOHAN FOURIE† AND DIETER VON FINTEL‡ Settlers are not all equal. Although the arrival of the French Huguenots in 1688 is heralded as the event that buttressed European settlement in the Cape Colony of South Africa, their impact was not only limited to explaining the rapid growth of the population circa 1700. Using tax records, we show that, controlling for various factors, the French were more adept at viticulture than the non-French farmers at the Cape. Standard factors of production or institutional factors usually associated with faster growth do not explain the differences between the two groups. We posit that the skills of French matter in explaining the productivity differences. We test this hypothesis by dividing the French settlers into two groups: those originating from wine regions, and those from wheat regions. We find that descendants of settlers from wine regions in France were more productive wine makers in their adopted homeland than their non-wine compatriots, whose production function resembled more closely those of the Dutch and German farmers. This important insight – that home-country production function determines settler-society production functions, even in later generations – sheds new light on our understanding of how newly-settled colonial societies develop, and of the importance of human capital in economic growth. Keywords: South Africa, Cape Colony, French Huguenots, VOC, wine, slaves JEL: N37, D31, D63 * This paper was prepared for the Economic History Association meetings in Illinois, USA, September 2010. We are grateful for the comments and suggestions on earlier versions by Jan Luiten van Zanden and colleagues at the University of Pretoria, Northwest University (Potchefstroom campus) and the University of the Witwatersrand. We also acknowledge the research assistance of Lydia-Maré Beukes and Ilze Boonzaaier. † Department of Economics, Stellenbosch University; Department of Economic and Social History, Utrecht University. Corresponding author: Johan Fourie. E-mail: [email protected]. ‡ Department of Economics, Stellenbosch University INTRODUCTION More recent investigations into the causes of cross-country growth performance identify institutions as one of the fundamental causes of economic growth. Proponents of this view argue that institutions affect the future distribution of resources, and that capital accumulation, quantity and quality of labour and innovation and technology are merely the embodiments, or proximate causes, of growth and are themselves influenced by institutions (Acemoglu, Johnson et al. 2005). Colonial societies are the setting for three important contributions in the field. Acemoglu, Johnson and Robinson (2001) (henceforth AJR) use settler mortality as a proxy for two institutions – low settler mortality ensured that a settler society developed with institutions favourable for growth, while high settler mortality resulted in growth-debilitating, extractive institutions. Engerman and Sokoloff (2000; 2000; 2005) emphasise the importance of initial factor endowments –climate, soil quality and the availability of a large native population – in explaining the formation of different institutions, and consequently diverse growth trajectories. La Porta et al. (2008) show that the legal origins transplanted by the colonial powers created different incentives for investors which influenced its financial development. Institutions are determined by local conditions in both the AJR and Engerman/Sokoloff hypotheses. Both theories and empirical strategies by extension posit that settlers are a homogenous group. In the context of La Porta et al. (2008), settlers in different colonies only differed to the extent that the legal origins of the ruling authorities were not the same in each territory. However, no distinction is made to account for the role that various settler groups had in the development of individual colonies. This paper challenges the notion of homogenous settler groups. The arrival of French Huguenots in the Dutch Cape Colony is used as a natural experiment in a setting where the local geography and institutions (which were introduced by Dutch East India Company rule) were identical for both the settled and immigrant populations. We show that the French were more productive at viticulture than wheat farming, while the Dutch specialised in wheat. This impact persists for later generations of settlers: by implication, human capital (knowledge of various types of farming) was transferred within various groups across generations, while culture had a less pronounced role in explaining this phenomenon. This is because in later generations, the French culture was completely assimilated into the Dutch society. In particular, the differences between Dutch and French descendants persist in wine production, suggesting that very specific skills are transferred to ensure later generations’ success. This is not the case for wheat production, where convergence across groups was possible, suggesting that more generic skills could be learned to attain success. To demonstrate these propositions, we use the opgaafrolle which were recorded for the purposes of tax collection by the VOC. Detailed household-level inventories and records of agricultural activities were captured during most of the first Dutch occupation (1652-1795), and even in the early period of British rule (1795-1803). This information was used to establish each household’s tax burden. The data used in this analysis spans the period from 1700 to 1773. What explains the differences in productivity between the French and Dutch? We refute a number of standard indicators that may explain the productivity differentials, including capital ownership, labour and household composition (household size, wage labour and slave use) and informal institutional attributes (language and religion). We posit that the skills (human capital) of the initial French settlers were the main factor influencing their decision to make wine, and their ability to do so better than the Dutch. We support this hypothesis by splitting the French Huguenots into two groups, those originating from wine regions in France and those descended from wheat-farming regions. Given that both groups were French Huguenots, we would expect no differences in their use of capital and labour and in their formal and, especially, informal institutions and shared cultural identity. Their skills set is therefore exogenously determined by the geography within their homeland. Our empirical results show that, controlling for different factors, the French from the wine regions also practised viticulture more effectively in the Cape better their compatriots descended from non-wine regions. This group more closely resembled their Dutch and German counterparts, suggesting that formal and informal institutions were not the defining factors determining mode of production and productivity in the colony. Viticulture had important implications for the development trajectory of the Cape. While the shift in output from cattle and wheat to wine seems insignificant, viticulture required a different production function to cattle and to some extent wheat farming. Viticulture was associated with short periods of seasonally high labour demand. In the absence of capital equipment (which would only be available by the end of the twentieth century), viticulture required labour intensive production (at least during harvest season), which increased the demand for labour. While the indigenous Khoikhoi could potentially be forced to supply their labour, Dutch policy prevented farmers from enslaving them. Following the devastating smallpox epidemic that ravaged the Cape Colony in 1713 (with an estimated 9 out of every 10 Khoikhoi killed), the Cape policy unit in 1717 suggested to the Lords XVII in Amsterdam to import slaves rather than encourage European immigration. Wine making thus raised the demand for labour, encouraging slave imports and, as our earlier work shows, increasing inequality (Fourie and von Fintel 2010). Following the Engerman- Sokoloff hypothesis, severe initial inequality sustains unequal institutions that result in a lower level of comparative development today. South Africa is a case in point. Our results have important implications for the literature on colonial societies. Colonial institutions are shaped not only by whether settlers stay or not (as per AJR), which legal system they adopt (as per La Porta et al.), or their language, religion or beliefs, but by the set of skills, knowledge and experience brought from their country of origin. Skills affect the production function in the adopted homeland, which determines the distribution of resources and future growth potential of the colonial settlement. SETTLERS, INSTITUTIONS AND HUMAN CAPITAL While the debate still rages on as to which of geography or institutions explain economic development, it has arguably become more refined. Initial proponents of the geography- endowments hypothesis explained economic underdevelopment as a result of the quality of land, climate, the disease environment and labour availability, with each influencing the production technologies available. Temperate zones, for example, are considered to produce higher crop yields, provide more suitable living conditions and are more conducive for technology-augmenting production techniques vis-à-vis tropical zones (Diamond 1997; Bloom and Sachs 1998; Landes 1998; Sachs
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